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The annual UK inflation rate more than doubled to 1.5% in April, as prices were driven higher by a rise in energy costs as well as clothing prices.
April saw a 9.2% increase in the gas and electricity price cap, and a 13.6% jump in motor fuel prices, which are now at their highest level since January 2020. Clothing also saw a price increase as retailers reversed the aggressive discounting seen during lockdown.
Food prices also rose 0.9% in April with chocolate and ice cream prices increasing.
ONS Chief Economist Grant Fitzner said the rise was “Mainly due to prices rising this year compared with the falls seen at the start of the pandemic this time last year.”
Hannah Audino, economist at PwC, says she expects inflation to continue to rise as lockdown restrictions are eased, and that the reopening of the economy will allow “consumers to unleash some of their excess savings.”
However, Ruth Gregory, senior UK economist at Capital economics, says this burst of inflation will be temporary because it was in part due to the effects of energy price rises which should go into reverse next year.
This increase pushes inflation close to the Bank of England’s target of 2%, and economists are forecasting further increases when they next update is delivered in June because prices for air travel and package holidays will rise as consumer demand rebounds.
The inflation news caused a fall in the FTSE 100 this morning, which was down 0.9% at 6,969.65 because of fears of monetary policy tightening by the Bank of England.
